Topic: [GLBSE] Introducing: Bitcoin Syndicate, a new mining op trading publicly! - page 14. (Read 23317 times)

Hey guys, sorry for the delay in response I was out for a good chunk of the day.

I'll try to answer all of these questions/comments to the best of my ability.

First, THANK YOU for the feedback, and critical thinking! I'm glad to see people are thinking this through initially and asking questions. Blind investment is not what we're looking for.

First, the deviation in MHash/s, that is the rate calculated from our mining proxy which proxies us to the pool. This is the standard un-modified bitcoin mining proxy from github (https://github.com/cdhowie/Bitcoin-mining-proxy)

Our site polls data from the miner database, and shows the current average rate for a one hour window. So that rate will fluctuate (According to the readme for the mining proxy) based on fluctuations in luck and rejected shares.
In addition, we have one mining rig offline at the moment, which will be spinning up shortly, that rig will contribute another 600MHash/s (this is Andrew's rig).

Now, as for the reason for the pricing. To be honest, buying retail mining gear, according to prices on the wiki for mining hardware comparison, and retail "new" prices for gear, we came up with that number (local prices in Ottawa, Ontario, Canada, or cost of online purchases shipped to our location). And frankly buying new hardware, without spending days/weeks/months seeking the ultimate deals I find it difficult to build a full rig, including adequate cooling/chassis/power for under that cost per mhash/s. BUT if my calculations are way off, and someone can point me at a better source for hardware that brings that cost per mhash down significantly, I'd be interested in seeing it (and hell I'll likely use it lol).

As for the concept of the loan. Most GPU mining gear is intended to pay for itself within 1 year time. We are using this hardware to kickstart the syndicate. And with or without outside investors we plan on going ahead with this (unfortunately at a slower growth rate). Our hope was that with outside investment (with 100% going into purchasing additional FPGAs) it would allow a faster growth curve, and allow some better economies of scale. And benefit everyone. We recognize that with the current model, running GPU rigs in a central location right now, day one, and making it profitable is not feasible as a business model. Electricity and cooling costs would be a problem, and so on. With the loan, each founder is responsible for "best effort" to ensure 100% uptime, and to provide their MHash. If gear fails before the end of the loan period, they would be responsible for replacing those MHash. And they are responsible for all upkeep, maintenance, and electricity/cooling costs for those rigs. This way the syndicate is getting MHash, raw. And that's it. I think that does bring a fair bit of value to the table.

Before moving on, to qualify my statement above about it not being a feasible business model, I mean at our current scale, we can't justify renting space and/or paying for hosting for a large scale mining cluster (6-10 GHash) based on GPUs. We have no one central location to handle that, so we are co-operating until we can transition into a large enough scale to justify that location. And we are using the existing GPU rigs as a transitionary step to move towards FPGAs which are much more sustainable as a long term model.

Anyway, so to recap on the previous points. The loan period is meant to be our contribution in MHash to the pool, to get it started. To help kickstart things so to speak until the syndicate is self sufficient with the FPGAs. Your investment is not in the hardware of our GPU rigs. It will be a share in the purchased hardware which will be fully owned by the syndicate, and it will be an investment in a share of the profit/growth to come for the syndicate. The loan period provides that I think, and I don't think that is unfair. But again I'm willing to hear other arguments to consider other points of view.

Now moving on... About the future opportunities information, some of these are up in the air, only because they will be fully dependant on a motion. Right now the only solid venture is mining, but we have several ideas (some partially executed, and waiting in the wings) which once we are in operation, the IPO is done, and we are turning a profit, we can raise a motion about adopting them as additional official ventures under the syndicate. Some of those ideas (summarized to point form) are:
- We are engineering our own FPGA solution. Will be mass produced, and distributed, and we'll be able to tap economy of scale to buy FPGAs at a much more efficient rate in the near future. The FPGA solution is intended to be a professional grade, targeted mining board, designed for high density clusters. With a better cost/mhash ratio than anything else out there (that I'm aware of).
- I have a site nearly complete, designed to be a user rating/evaluation portal for bitcoin based businesses. Allowing the community to establish trust levels for the various businesses and ventures out there. It would be 100% community driven, but with the option of the syndicate providing impartial checklist based evaluations of a business for a small fee. All scores and methods of calculating the scores would be published, and the rating system would be fully community dependant. With additional features such as conflict resolution, and mediation as well.
- A bitcoin based kickstarter type service (yes I know a few have tried, but I haven't seen any that have really "pulled it off" yet.
- Our own mining pool (once we have enough internal hashrate to justify it for our own purposes, then we could open it out, would need to develop some benefits to make it worth while of course for people to mine on our pool).
- Leasing our hashrate out through things like GPUMAX, provided their rates are better than our direct mining payout. (to be done on a case by case basis).
- A bitcoin based competitve gaming league (e-sports). (not betting, actual competitve tournaments, using bitcoin for the base currency, based on accepted ESL games).

That's a sample of the ideas we have pending, but initially we want to stabilize the syndicate first, get the IPO done, and then look at other opportunities. Some of those are merely ideas, to be discussed, and refined (or rejected if we can't make a real business case for them), and some are actually underway already, but will be voted on, and either run under the syndicate umbrella, or driven forward independantly (or abandoned once again if the business case falls apart).

Next point. About my forecasts. The math was rather simple really. We didn't get extremely deep into it yet, but we calculated based on the following:
Average earning rate per MHash/s
Expected trend in that earning rate
Expected reduction in block chain payout
Current MHash/s of the syndicate (with our GPU rigs).
Share price we intend to sell at (0.25BTC per share).
The number of FPGA boards we can buy with that capital (if successful, approximately 15 boards).
The hashrate of the new syndicate, and the number of new boards we could then buy per month for the first 6 months.
Increases in FPGA efficiency expected from our new design and costing.

Based on all of the above, we expect to be able to buy 2 additional boards for the first couple months, increasing to 3 new boards after that. Some of the costing on our new designs are up in the air, but we're very confident we can beat current hashrate/cost ratios. So based on that (and dealing with the manufacturing directly), we expect the total value of the assets the syndicate owns, (based on the initial investment from the IPO at 0.25/share) to grow by 100%. (so for example, if we buy 6GHash/s of FPGA gear directly off the IPO, we expect this to increase to 12GHash/s by the end of one year). That means the held assets, and profitability of the syndicate will have doubled, meaning the "raw value" per share should double within that time. When considering the growth in value of the shares, combined with the payout rate over the year, the total payout comes out to be about 105% of what we would expect with our own mining gear with equivalent investment (if we took our miners, never did the syndicate, and just mined for ourselves, we would end up with slightly less profit than we would have in total value gained with the syndicate, not purely mining power, but total value).

I can break down the math in more detail than that if needed, but ultimately we are basing it off of round numbers which I felt were "conservative" based on what I've observed of the bitcoin economy over the past while, and what I expect to happen. Also not accounting for any other possible gains from our other ventures, or on any unexpected wins that may happen (economy shift, another bubble, or whatever). I wasn't intending that number to be a hard guaranteed number, purely an estimate of what we expect ourselves.

Next point, to touch on the clause to let the founders dissolve the syndicate. This one is a negative point sure, but it's also standard fare. Every other mining op trading on GLBSE (that I looked into) had a similar clause in their terms. This is plain common sense. The founders are physically responsible for maintaining and operating the gear. We are incurring expenses. And if the entire economy collapses, or something else catastrophic happens, we need to protect ourselves with the option to call an end to it. We are not giving ourselves a universal "run away with your stuff" clause. We're trying to make it as fair as possible (And please read the segments of the bylaws on liquidation) we try to create an impartial and fair way to decide on the value of the gear, and to then liquidate the gear. Paying back shareholders from the liquidated assets. Also keep in mind if there are loopholes in the bylaws, I'll be glad to adjust them (provided the adjustment is justified). I'm not a lawyer, and we aren't hiring a lawyer to write those up. I personally wrote them all and got an agreement from the other founding members. But this is the first public review, my wording may not be airtight, so give me suggestions! But that said, the "bail out" clause for the founders (who are physically responsible for the operation) will remain. That's as I said, standard fare.

If it helps at all, we have NO intention of that happening. Hell if things are going well, I'll likely (and I know most of the other founders will as well) continue to contribute our GPU gear regardless of the end of the loan term. Just to help the syndicate succeed. But we needed a firm decision so there is a set expectation. I know we all plan on doing this either way. This is not a cash grab to get free money. We're running this syndicate for ourselves even if we get no investment at all. But we wanted to open it up, and hopefully allow a pooling of more resources to open up opportunities for us that wouldn't otherwise be available (yet). If the community ultimately decides it's too risky, that's fine, we'll operate anyway, and revisit at a later time. But I think this really is a GOOD opportunity, that offers great potential. And I really hope more people get on board, to help us do something great.

Anyway, this has been a long post, I sometimes ramble. But I really hope this has put some of your concerns to rest, and at least answered many of your questions. Please feel free to fire more back, as I said I'm actually really glad this feedback is coming in, this is great!

Lastly, a couple other points:
Registration info is in my name, as showin in whois. My identity will be validated by passport/drivers license as well as physical mail validation of my address. The "office address" is my home address. My info is all over the net, you won't have trouble finding details of who I am and what I do. and I have nothing to hide in that regard.

About the IPO itself. We're waiting on one of the founders to sign off on the release of shares, we hope to be able to do the public release of shares tomorrow sometime. (Tuesday the 21st). I'll post an update when that happens.

In the meantime keep the conversation coming!

Until Glasswalker explains more, my recommendation would be not to buy, that is correct. If my assumptions were incorrect or he can satisfactorily answer my questions, I'll buy; I always think it's a good idea to support the Bitcoin economy.

EDIT: He had indeed explained more, please continue reading and disregard my above statement.

your add here:

free tip: keep your contribution scarce and valuable.

You are indeed correct; thanks for pointing that out. I had simply assumed the price was for purchasing, because it was listed as "this rate is calculated based on the average "street price" of building a mining rig at the time of the formation of the syndicate". Rather deceptive.

With that in mind, glasswalker, you have some serious explaining to do before you release shares.

Read further... this is not a purchase of the hardware, the hardware is merely being LOANED!

It is probably a crazy-high price to buy used gear, to pay it just to borrow the gear is what? Reasonable as lease of hashing costs more than outright buying used gear? Crazier because buying used gear might be a lot cheaper depending on how much it costs to maintain it?

If the gear fails, do the founders it is being leased from guarantee to replace any missing MHashes by for example leasing some elsewhere at their own expense to make up the shortfall?

This kind of plan could be a great way to put some used FPGA gear on a local market for easy convenient purchase, notice the founders can force the thing to shut down and sell its assets (which do not include the initial hardware, which is merely leased/"loaned") for the founders to pick up cheap without even shipping costs...

I want to put together a shares setup for buying FPGA gear but I certainly don't plan on this kind of piracy, heck I didn't even imagine for a moment one would have any chance of getting away with it, as in actually selling any shares. How gullible *are* the buyers on GLBSE?

-MarkM-

5.8 GH/s now. I'm guessing there's some rounding going on.

Glasswalker, though your post and website are both well-written, I feel they lack some essential concrete information. If you want investors in a project led by someone with (no offense) no reputation on these forums or IRC that I know of, you'll need to provide more details. A few points of note:
1. "We intend to do so much more". I appreciate broad-mindedness, but people want to know what they're investing in. A general statement of expanding beyond mining could indicate anything from beekeeping to car sales. You will not be able to sell shares if you do not tell people what else you plan to invest in.
2. "Our current forecasts". You mention transparency as one of your main goals, yet nowhere on your post or site can I find these "forecasts". This smells a bit fishy. You cannot be "open, transparent, and honest" while concealing financial growth predictions.
3. Your share assignment to the owners (bylaws section 4.1) seems a bit overdone. 0.18 BTC, at the time of registration of your domain name, February 9th, was equivalent (1 BTC ~ $5.60 USD) to $1 per Mhash. That would be perhaps a fair rate for FPGAs, but certainly not for GPUs. Even with extraneous parts like cases, you can easily get $0.75/MH, and with optimization, below $0.50/MH is possible. Seems to me like the rewards are a bit overblown.

Whois info for anyone interested:

You requested questions/feedback, here you are. I'm always supportive of new Bitcoin ventures, and I'd certainly consider investing, but I would appreciate more information.

and as of today 2013 feb 11 (monday) it seems to be the end of the syndicate.
it did not last a single year - see Paul's OP

founding members failed to meet their end of the loan of 6 GH/s.
what they did not fail is to claim the rights stemming from the shares (dividends and votes)

I would like to introduce to you, the Bitcoin Syndicate.

We are co-operative of individuals working together to mine, earn profit, and seek out ways to benefit the bitcoin economy and community as a whole.

I'll keep this brief, as there is a ton of information over on our site for you to read through:

• Aggressive Growth: We are using an aggressive growth profile as our primary strategy. Our current forecasts show 100% growth in the first year (shares double in value in a 12 month period)
• We are primarily a mining operation, but we intend to do so much more We are currently a mining operation. And that will be our primary means of growth/profit for the immediate future. However we have several awesome initiatives in the wings, which we will use to expand into new areas. We don't plan on putting all our eggs in one basket long term (mining), though it will always be a prominent feature for us.
• We currently operate a 6GHash/s GPU Cluster, and intend to grow FAST! Our founding members have given us a kickstart with enough GPU based mining hardware to build a 6GHash/s cluster. That's pretty big already for a publicly traded mining op. But we intend to use 100% of the funds from our IPO to invest in a large FPGA mining cluster, and to grow the size of that FPGA cluster by a fairly large margin each month!
• We are open, transparent, and honest: One of our primary goals is to stay as open, transparent, and honest as possible. we will openly share information, our identities, our financial records, and anything else of value or importance to the community and our shareholders. See our site now for our live financial records, and realtime stats of our mining. We'll be expanding this over time to be more robust (based on shareholder feedback!). We will try our best to answer any questions, and make our investors feel at ease with their investment. In addition we will be going through the full extent of identity verification processes with GLBSE 2.0, so you will have a face, name, address, and so on to put to our key members, and the organization as a whole.
• We are passionate about bitcoin, and want it to thrive. we are also passionate about our own success! We are all passionate about bitcoin as a concept, and want it to succeed and grow. So many/all of our initiatives are designed to achieve this goal. What's good for bitcoin is also good for the Syndicate! Also, we are passionate about the syndicate, and will ensure we always continue to drive towards growth, and success. We won't let our momentum fall!
• We are profitable! We will be paying dividends, but primarily we will be focusing on growth. 80% of all earnings (this number is open to a motion of course), will be dedicated to expanding our operation. The remaining 20% will go into dividends to be paid out each month. This may sound like you don't earn much, but consider that your investment (and shares) represent a share in ownership of Syndicate hardware, as it expands, the value of those shares expands with it! In addition, if all goes according to our forecasts (Which of course it may or may not, but we feel we've used conservative estimates in the forecasts) an investment in the Syndicate at the IPO, allowed to grow over a 1 year term, will result in overall 5% more profits for the shareholder, than the same investment planted into a purely dividend based mining operation. And after that, the growth will increase your profits drastically.
• We're in it with a long term game plan We are in this for the long haul. We're not looking for quick returns, and fast get rich ideas. We want to build a long term, sustainable, and overall profitable organization. Which is a positive contributing force to the bitcoin community, and economy. And we want to maximize our overall profits (and therefor those of our shareholders) over the long haul.

If this sounds interesting to you, we'll be doing our first public release of shares VERY shortly (if all goes well, within the next 24 hours, so by the 21st of Feb at the latest).
In this IPO we have issued 12,000 shares. Of which the founders were compensated for their initial contribution of mining hardware (at rates according to public value, all documented clearly in our bylaws). So the founders start off with approximately 45% controlling interest in the Syndicate. That remaining 55% of the shares will all go on sale during the IPO, at a price of 0.25BTC per share. A mere quarter bitcoin will allow you to get in on this excellent investment opportunity.

For more information, check out our website at: http://www.btcsyn.com

And of course if you have any questions, or feedback, we would love to hear them! Please feel free to post here, and I'll do my best to answer promptly!

EDIT (02/21/2012 4:09PM EST):
We have scheduled to do our full public IPO at 10PM EST tonight. That's 10PM EST Tuesday Feb 21st. Approx 7000 shares will be released at 0.25BTC per share via GLBSE For Asset ID: d84ef5271950f7d41bad3ea51059fdb4f25d6b8d455456c0bf8339471242b538  (ticker: BTCSYN) Looking forward to seeing what kind of interest we generate!

EDIT (02/21/2012 10:13PM EST):
Our IPO is delayed by a few minutes due to a minor transaction error on GLBSE. Working with Nefario on it now. I hope to have the IPO completed within 15 minutes.
Sorry for any inconvenience from the delay.
Thanks for your patience!

EDIT (02/21/2012 10:42PM EST):
The IPO is officially live! The shares are now publicly trading in the wild!